Prosperity amid austerity

HICL Infrastructure, the UK’s first listed infrastructure investment company, turns five years old this year and is celebrating the milestone with a set of strong results for the year ending March 31 2011, including several new investments that have helped it to almost triple the size of its portfolio since inception.

Tony Roper, head of the InfraRed Capital Partners’ team responsible for HICL, claimed that “last year was a very good year for investments and for raising capital”, referring to the £159 million (€182 million; $257 million) HICL raised in 2010. He was also bullish on the deal pipeline for 2011, saying it was “the best pipeline in our space in a number of years”.

What’s interesting is that this bullishness comes from an investor focused on projects that form part of the UK’s Private Finance Initiative (PFI), the country’s standardised procurement process for public-private partnerships. With the UK’s coalition government having been heavily critical of PFI schemes launched by the previous government, and having slashed the lucrative Building Schools for the Future programme, this seems counterintuitive.  

That is not to say HICL is immune to the government’s austerity measures. In fact, one of its projects, the Queen’s Hospital, in Romford, is being scrutinised by the Treasury for potential savings, serving as a pilot project for achieving savings in other PFI contracts.

Roper, however, expects most savings to be achieved through “more efficiency on the provision of services, facilities management and energy efficiency”. In its annual results presentation, HICL said it “would not welcome, nor do we expect, any unilateral redefinition of the terms of the contract given the very wide implications that would then arise”.